Gold prices are expected to remain under pressure in the near term as investors weigh the possibility of further US Federal Reserve policy tightening, although structural demand from central banks and geopolitical uncertainty should continue to support the precious metal over the longer term, according to OCBC Malaysia.
In a research note, the bank said elevated real bond yields, a resilient US dollar and continued weakness in investment flows have increased the opportunity cost of holding non-yielding assets such as gold, limiting the scope for a sustained recovery.
While the Federal Reserve’s decision to keep interest rates unchanged at its July 30 policy meeting provided some relief to bullion markets, OCBC noted that policymakers stopped short of ruling out another rate hike, leaving upcoming US inflation and labour market data as key determinants for gold prices.
The research house added that rising oil prices could further complicate the outlook by reinforcing inflation concerns, keeping market interest rates elevated and delaying any meaningful rebound in gold.
Despite the recent weakness, OCBC cautioned against expecting a prolonged decline from gold’s January peak.
It said much of the market’s hawkish repricing has already taken place, with real yields reaching elevated levels while investor positioning in gold has been significantly reduced.
As a result, the bank believes the threshold for another major sell-off is relatively high unless the Federal Reserve adopts a more aggressive tightening stance, oil prices climb substantially higher or exchange-traded fund (ETF) outflows accelerate further.
Conversely, any stabilisation in real yields, renewed weakness in the US dollar or a recovery in ETF demand could restore upward momentum for gold prices.
OCBC also highlighted that longer-term structural themes, including global reserve diversification and concerns over currency debasement, remain supportive of the precious metal.
The bank expects central banks to continue accumulating gold as reserve managers seek diversification, liquidity and protection against sanctions and geopolitical risks.
It added that persistent fiscal deficits, rising government debt levels and uncertainty surrounding the long-term role of traditional reserve currencies should continue to underpin gold’s appeal as a strategic reserve asset.
While these factors may not prevent short-term price corrections, they are expected to provide a solid foundation for gold over time.
“The outlook is cautious in the near term, but not structurally bearish,” the research note said.
From a technical perspective, OCBC said gold was last trading around US$4,075 per ounce, with daily momentum remaining mildly positive despite a largely flat relative strength index (RSI).
The bank expects gold to remain range-bound in the near term, with immediate resistance seen at US$4,150 and US$4,190 per ounce, the latter coinciding with the 50-day moving average. Key support levels are identified at US$4,000 and US$3,960 per ounce.
Looking ahead, OCBC forecasts gold prices to strengthen gradually over the coming quarters, projecting bullion to end the third quarter of 2026 at US$4,180 per ounce before rising to US$4,360 by the end of the fourth quarter.
The bank expects prices to continue climbing to US$4,520 in the first quarter of 2027, US$4,680 in the second quarter, and US$4,820 per ounce by the end of 2027.
